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Activists ‘lawyered up’ in climate battle
As Australian lawmakers continue to grapple with climate policy, the direction of its impact on business is becoming progressively clear.
Climate activists are increasingly ‘lawyered up’ in the fight against carbon emissions. While the United Kingdom, United States, European Union and Australia are already climate litigation hot spots, this will only increase in years to come.
The protagonists in this battle include litigation funders and plaintiff law firms, who come to the aid of environmental activists to seek legal remedy on issues ranging from biodiversity loss to supply chain management.
Well-organised climate activists are increasingly buying shares in major polluters, as a platform to launch legal action as shareholders.
And whether it’s the company share price, leadership team, or brand recognition, all this can be jeopardised by poor management of environmental and social risks.
The targets of such litigation are not necessarily major polluters, but can include more conventional players and financial services companies who are seen as aiding or enabling carbon pollution.
“You don’t need to be a major polluter to be the target of climate litigation. Financial institutions, for example, are facing increased scrutiny from regulators on climate risk disclosures,” said Tricia Hobson, Partner, DLA Piper.
“While investigations are the current focus, we’ll see more class actions into the future. Class actions are an obvious direction for plaintiff lawyers and activists to pursue, but the law needs to develop a little further on that front before they will dive in and commence actions,” Tricia added.
The regulators, too, are tightening the screws on the practice of greenwashing, with the Australian Securities and Investment Commission (ASIC) promising tough action on companies which embellish their environmental record.
“Companies should be mindful that misrepresenting green credentials will increasingly lead to heavy penalties. They need to be able to back-up the claims they are making,” Tricia said.
The Australian Consumer and Competition Commission (ACCC) is also on the lookout for misleading claims regarding environmental impact and sustainability of products and operations.
Corporations are now developing Climate Litigation Strategies to manage the increased legal risk from climate change activists and regulators.
“Board directors should consider Climate Litigation Strategies to minimise their own legal risks and that of their company. We’re in an era where senior executives and directors need more protection than ever before,” Tricia said.
“Companies are also developing their Environmental, Social and Governance (ESG) policies to minimise the litigation risk. While there are currently no globally uniform standards around the various aspects of ESG reporting, that’s likely to change in the future,” Tricia added.
Tricia Hobson, Partner, DLA Piper
